ABUJA, NIGERIA — Nigeria’s energy sector is bracing for a significant shock as economic experts and petroleum marketers sound the alarm over a looming spike in pump prices. With global crude oil benchmarks hitting $105 per barrel this week—a direct consequence of the escalating military conflict in the Middle East—the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) has warned that petrol prices could reach a staggering ₦1,500 per litre in the coming days.
The Middle East "Risk Premium" The primary driver of this projected hike is the "risk premium" currently baked into global oil prices. Since the outbreak of hostilities between the U.S.-Israel coalition and Iran on February 28, the Strait of Hormuz—a chokepoint through which 20% of the world's oil passes—has been effectively neutralized for most international shipping. This has caused Brent crude to leap from the mid-$70s to over $100 in less than two weeks. For a country like Nigeria, which operates a deregulated downstream sector, these international movements translate almost instantly into domestic costs.
PETROAN’s Grim Forecast Speaking on the development, PETROAN President Dr. Billy Gillis-Harry noted that the current pricing template is under immense pressure. "If the conflict persists and crude continues its climb toward the $120 mark projected by some analysts, the landing cost of Premium Motor Spirit (PMS) will naturally force retail prices to between ₦1,500 and ₦1,800 per litre," he stated. He emphasized that even with the Dangote Refinery operating at high capacity, the facility still purchases crude at international market rates, making it impossible to fully insulate the local market from global shocks.
The "Dangote Factor" and Market Realities The Dangote Petroleum Refinery has already made several adjustments to its gantry prices this month. Earlier this week, the refinery briefly reduced prices by ₦100 following a slight dip in crude, but as global benchmarks rebounded to $105 on Friday, marketers expect another upward review. Finance Minister Wale Edun recently urged Nigerians to be "thankful" for the domestic refining capacity, arguing that without it, the country would be facing not just high prices, but absolute product scarcity and "chaos at the pumps."
Inflationary Impact Economists warn that a jump to ₦1,500 per litre would have a catastrophic ripple effect on the Nigerian economy. Transportation fares are expected to rise by at least 40%, which will in turn drive up the cost of food and essential services. This comes at a time when the National Bureau of Statistics (NBS) is already reporting record-high inflation levels. As the "Fire and Fury" in the Gulf shows no signs of abating, Nigerians are being advised to brace for a period of extreme energy volatility.
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